Executive Summary

We design, manufacture, market, and service enabling solutions for customers in the HB-LED, solar, data storage, scientific research, semiconductor, and industrial markets. We have leading technology positions in our three businesses: LED & Solar Process Equipment, Data Storage Process Equipment, and Metrology Instruments.

In our LED & Solar segment, we design and manufacture MOCVD systems, MBE systems and sources, and other types of deposition systems such as web and glass coaters, which we sell primarily to manufacturers of HB-LEDs and solar panels, as well as to scientific research customers.

In our Data Storage segment, we design and manufacture ion beam etch, ion beam deposition, diamond-like carbon, physical vapor deposition, and dicing and slicing products primarily used to create TFMHs that read and write data on hard drives.

In our Metrology segment, we design and manufacture AFMs, SPMs, stylus profilers, and optical interferometers used to provide critical surface measurements in research and production environments. This broad line of products is used in universities, research facilities and scientific centers worldwide. In production environments such as semiconductor, data storage and other industries, our metrology instruments enable customers to monitor their products throughout the manufacturing process to improve yields, reduce costs, and improve product quality.

We currently maintain facilities in Arizona, California, Colorado, Massachusetts, Minnesota, New Jersey and New York, with sales and service locations in North America, Europe, Japan, and the Asia Pacific region.

Highlights of the First Quarter of 2009



†          Revenue was $62.8 million, a 38.6% decrease from the first quarter of
2008.

†          Orders were $53.1 million, down 51.4% from the first quarter of 2008.

†          Net loss was $20.9 million, or ($0.66) per share, compared to a net
loss of $2.3 million, or ($0.07) per share, in the first quarter of 2008.

†          Gross margins were 32.4%, compared to 41.7% in the first quarter of
2008.

†          Restructuring charges totaled $4.4 million, principally consisting of

† We recognized an inventory write-off of $1.5 million in our Data Storage Process Equipment segment in the first quarter of 2009.

Outlook

The global economic slowdown has had a significant negative impact on our business as we start 2009, affecting our customers' ability and willingness to invest in capital projects in the short term.

Key areas of focus for Veeco in 2009 include: